Softbank “gives credit” of US$107 million to brazilian Fintech Open Co to finance the company's growth

January 3, 2022
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The Japanese fund is leading a new round at Open Co, an unsecured credit fintech resulting from the union of Rebel and Geru. The money arrives nine months after the last contribution. Know the plans

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Nine months after raising R$ 150 million from the International Finance Corporation (IFC), the World Bank's investment arm in the private sector, fintech Open Co is back on the market. This Wednesday, December 15, the company that operates in the area of ​​unsecured credit announced an investment of R$ 600 million led by Softbank.

The new check will be used by Open Co, which was born in March of this year after the merger of startups Geru and Rebel, to finance the company's growth. There are already 200,000 active customers, double the amount registered right after the merger. In the same period, the value of loans increased from R$1.5 billion to R$2.3 billion.

“Today, Open Co is already a company with a profitable operation, with profitable transactions. But our business needs capital to grow”, tells NeoFeed Sandro Reiss, co-founder of Open Co alongside Rafael Pereira.

The round is also being followed by current investors, including Raiz Investimentos, IFC and LTS, the investment vehicle of Jorge Paulo Lemann, Marcelo Telles and Beto Sicupira.

In addition to investing in technology to create ways to expand the ability to lend money, Open Co will use the proceeds to create more targeted credit lines. The idea is to offer different products for those who want to refinance a debt or open a business, for example.

The financing of a “buy now pay later” model is also on the radar, which works as a kind of digital credit facility in which fintech serves as an intermediary between the consumer and the online store.

According to Open Co, the unsecured credit market moves BRL 1.1 trillion a year, of which BRL 700 billion correspond to revolving credits and which have interest rates that can exceed 300% per year.

Fintech also informs that about 52% of Brazilians resort to credit to pay basic expenses, which contributes to increasing the number of indebted people, which today totals more than 62 million people in the country.

"The indebtedness of families has already arrived in the consumption of food at the supermarket and we are seeing in advance a scenario that should get even worse because interest rates have not yet risen as much as they could in the coming year", says Leonardo Trevisan, professor of economics at ESPM .

A survey conducted by Serasa with Opinion Box points out that 79% of Brazilians sought credit during the pandemic and 37% had their requests denied. Most of the negatives (40%) were related to the fact that people seeking credit had low or no income.

“This client is completely expelled from the credit market or has access to poor quality credit and with terrible conditions”, says Reiss. “It is challenging to develop financial products for this audience. There are no bad customers, but with more or less risk.”

Open Co tries to solve this problem. Customized, the interest rates for personal loans offered by the startup start at 1.9% per month. Open's challenge, however, is to keep the default rate under control.

Fintech does not disclose its current rate of defaulting customers, but says it is about the market average. The key to doing this involves data science techniques to try to find, among all applicants, those who can be creditworthy, the optimum amount, and the fees that need to be charged.

Open Co does not compete directly with services offered by well-known names such as Crefisa and Creditas, which require some asset as collateral for the loan. Among the competitors in the unsecured loan market are smaller startups such as Loan Sim and Provu.

Profitable, Open Co also takes part of its revenue from an operation focused on B2B and which should gain new investments this year. Created three years ago, the division represents a 40% share of the company's business.

The plans to boost the area, which already has a partnership with Ame, Americanas' digital wallet, and Voltz, Energisa's digital account, however, are still under wraps. The goal is to have even greater growth in 2022 than this year, when it tripled in size.

Note on NeoFeed

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y de ellas son responsables sus autores. No reflejan ni comprometen el pensamiento u opinión de Latam Fintech Hub, por lo cual no pueden ser interpretadas como recomendaciones emitidas por la platafomra. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista sobre el ecosistema Fintech.

Nine months after raising R$ 150 million from the International Finance Corporation (IFC), the World Bank's investment arm in the private sector, fintech Open Co is back on the market. This Wednesday, December 15, the company that operates in the area of ​​unsecured credit announced an investment of R$ 600 million led by Softbank.

The new check will be used by Open Co, which was born in March of this year after the merger of startups Geru and Rebel, to finance the company's growth. There are already 200,000 active customers, double the amount registered right after the merger. In the same period, the value of loans increased from R$1.5 billion to R$2.3 billion.

“Today, Open Co is already a company with a profitable operation, with profitable transactions. But our business needs capital to grow”, tells NeoFeed Sandro Reiss, co-founder of Open Co alongside Rafael Pereira.

The round is also being followed by current investors, including Raiz Investimentos, IFC and LTS, the investment vehicle of Jorge Paulo Lemann, Marcelo Telles and Beto Sicupira.

In addition to investing in technology to create ways to expand the ability to lend money, Open Co will use the proceeds to create more targeted credit lines. The idea is to offer different products for those who want to refinance a debt or open a business, for example.

The financing of a “buy now pay later” model is also on the radar, which works as a kind of digital credit facility in which fintech serves as an intermediary between the consumer and the online store.

According to Open Co, the unsecured credit market moves BRL 1.1 trillion a year, of which BRL 700 billion correspond to revolving credits and which have interest rates that can exceed 300% per year.

Fintech also informs that about 52% of Brazilians resort to credit to pay basic expenses, which contributes to increasing the number of indebted people, which today totals more than 62 million people in the country.

"The indebtedness of families has already arrived in the consumption of food at the supermarket and we are seeing in advance a scenario that should get even worse because interest rates have not yet risen as much as they could in the coming year", says Leonardo Trevisan, professor of economics at ESPM .

A survey conducted by Serasa with Opinion Box points out that 79% of Brazilians sought credit during the pandemic and 37% had their requests denied. Most of the negatives (40%) were related to the fact that people seeking credit had low or no income.

“This client is completely expelled from the credit market or has access to poor quality credit and with terrible conditions”, says Reiss. “It is challenging to develop financial products for this audience. There are no bad customers, but with more or less risk.”

Open Co tries to solve this problem. Customized, the interest rates for personal loans offered by the startup start at 1.9% per month. Open's challenge, however, is to keep the default rate under control.

Fintech does not disclose its current rate of defaulting customers, but says it is about the market average. The key to doing this involves data science techniques to try to find, among all applicants, those who can be creditworthy, the optimum amount, and the fees that need to be charged.

Open Co does not compete directly with services offered by well-known names such as Crefisa and Creditas, which require some asset as collateral for the loan. Among the competitors in the unsecured loan market are smaller startups such as Loan Sim and Provu.

Profitable, Open Co also takes part of its revenue from an operation focused on B2B and which should gain new investments this year. Created three years ago, the division represents a 40% share of the company's business.

The plans to boost the area, which already has a partnership with Ame, Americanas' digital wallet, and Voltz, Energisa's digital account, however, are still under wraps. The goal is to have even greater growth in 2022 than this year, when it tripled in size.

Note on NeoFeed

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y solamente sus autores son responsables de ellas. No reflejan ni comprometen el pensamiento o la opinión del equipo de Latam Fintech Hub y, por lo tanto, no pueden interpretarse como recomendaciones emitidas por la plataforma. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista en el ecosistema Fintech.
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